The end of the cable

There have been some very interesting global developments in the cable industry of late. It is reported that Vodafone may be considering buying Liberty Global International (UPC+Virgin Media). Cable&Wireless Communications have already acquired some of Liberty Global’s assets namely Columbus International.The question that must be asked is are the glory days of cable coming to an end?

Eamonn Wallace chairman of IrelandOffline said: “Meanwhile here in Ireland UPC lost about 1,800 customers this quarter. While revenue and margins are holding up (for now), the real problem is this revenue is mainly driven by price increases and higher triple play penetration, customers are moving and TV is no longer a reason for people to stay.This position is essentially is unsustainable into the future.”

Wallace continued “The Unique Selling Point of cable has been eroded by advancements in VDSL and by anticipation of the coming FTTH rollout by ESB/Voda and probably with the government’s National Broadband Plan. Soon the only game worth investing in is fibre to the home. Vodafone/ESB and even eircom themselves are now looking to fibre to the home networks and this will really eliminate any advantage where once cable was king.

Will DOCSIS 3.1 and the super speeds promised in DOCSIS 3.1 really give us anything new. The big problem here is that DOCSIS 3.1 will need a major investment to rollout. Improvements are needed in the core network itself and a much more important issue is that and each and every modem will need to be replaced. The next move may be away from Docsis to NG-PON2 or another fibre technology.“

Cable Plant quality varies wildly, most original cable systems were designed to deliver no more than 10 channels and many of the older cables already need to be fully replaced. UPC even seem to have left certain towns, mainly in the midlands, to their fate. Towns like Tullamore and Tipperary have very little modern cable plant and the cable networks there may even be closed when MMDS transmission ends in less than 18 months given that UPC network upgrade activities have slowed to a crawl in the past 2 years with 100,000 of the 850,000 premises they pass yet to be upgraded to modern cable.

Wallace went on “So the essential question is why spend all this cash on a squeezing a last wheeze out of the copper when a full and proper FTTH rollout would cost roughly the same?

Europe wide, Liberty Global lost 50,000 TV customers, this demonstrates that cable TV has lost it’s shine, the Horizon platform just isn’t that appealing to customers. Cable has remained competitive due to their admittedly excellent broadband offerings to date but perhaps a synthesis of triple/quad play will rescue them, this however seems unlikely.”

Also, with the global deployments of fibre now really speeding up – the costs are becoming lower, demand brings competition and this brings mass production and significant benefits. In fact in the USA alone, 23 millions homes are now being marketed to for FTTH deployments and Europe has in the region of 6.5m connected subscribers – none of this is good news in the long term for Cable and these numbers are growing rapidly.

Wallace continued : “One must examine the share price of C&W networks to see where cable is heading.

The message is clear, ubiquitous Fibre will ultimately kill cable networks and indeed all copper based networks. eircom are moving to make the last few metres as short as is practical. None of this will happen overnight but this slow death of copper is inevitable and has started now.

My guess is that John Malone (LGI chairman) sees the writing on the wall and is cashing out now while it’s all still worth something. One thing is for sure Fibre is coming to within a few 100 metres of pretty much all urban households in the developed world and the next stage will bring it in the door.”